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BNB Governor Advocates Tax Hikes In Belgium

by Ulrika Lomas,, Brussels

17 June 2010

Presenting the country’s spring economic forecast, Guy Quaden, governor of Belgium’s national bank (la Banque Nationale – BNB) put forward the idea of an increase in taxation.

While maintaining that cuts in public spending are vital, and should be a matter of priority for the next government, Quaden also stated that he would not rule out the introduction of additional tax measures. Defending his proposal, Quaden argued that he was unaware of any “tough” consolidation programme that did not involve an increase in revenue, either in Belgium or indeed in any other country.

Emphasizing the need to examine all possibilities, the BNB governor nevertheless warned of the dangers of increasing the existing tax burden on employment, underlining the fact that these costs are already among the highest in Belgium.

Urging the future government to make every effort to consolidate the country’s budget, the BNB noted that the deficit is due to reach 5% of GDP this year and 5.3% in 2011, higher than expected. The stability pact requires Belgium to achieve a deficit of 4.8% in 2010 and 4.1% in 2011, in a bid to reach a balanced budget by 2015.

Highlighting the need to improve the country’s economic growth potential, Quaden also suggested bringing the country’s unemployed back into work, controlling wage costs and increasing competition in specialized sectors such as energy or distribution.

Belgium’s planning bureau (le Bureau du Plan) has estimated that the next government must free up in the region of EUR22bn in order to balance the budget by 2015.

TAGS: tax | Belgium | budget

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